Another important judgement for Business Rescue was handed down
in the North Gauteng High Court by his Honorable Justice Legodi in
the matter of P T van Staden v Angel Ozone Products CC (In
Liquidation) & others on the 12th of October
The Applicant (member) of a Close Corporation named Angel Ozone
Products CC (First Respondent) brought an application in terms of
Section 131 of the Companies Act, Act 71 of 2008 ("new
Act") more than a year after the Magistrates Court of Pretoria
had granted a final liquidation order.
Three intervening parties as creditors opposed the application
mainly on the basis that the Applicant was not entitled to the
relief sought. Their argument was based on fact that liquidation
proceedings end when the Court grants a final liquidation order as
in this instance and, whereafter winding-up proceedings follow as
directed by the Master's office.
It was not disputed that liquidation proceedings can be
converted into business rescue proceedings. The intervening parties
however suggested that a distinction should be drawn between
liquidation proceedings and winding-up proceedings, and that a
Section 131 application can only be brought by an effected party
while liquidation proceedings are pending and winding-up
proceedings commence. The intervening parties argued that the new
Act does not have retrospective working on orders granted prior to
its commencement date, being the 1st of May 2011.
The Judge shared the views of Henochsberg on the Companies Act
71 of 2008 that liquidation proceedings or winding-up proceedings
can be converted into business rescue proceedings no matter how far
these proceedings might have progressed. Such contemplated business
rescue proceedings being a better option than the current
The Judge was furthermore of the view that liquidation
proceedings do not end when a final liquidation order is granted,
but only once a final Liquidation and Distribution Account has been
confirmed by the Master of the High Court as it was originally the
case in Section 408 of the old Companies Act, Act 61 of 1973
The Judge concluded that Item 10(2) of Schedule 5 to the new Act
makes it clear that an order granted in terms of the old Act is
subject to any further order that could be made under the new Act.
In the present matter the Judge found that the contemplated
business rescue proceedings do not purport to extinguish the
existing rights and obligations in terms of the old Act.
In conclusion Companies and/or Close Corporations subject to
final liquidation orders will still be able to apply to convert
such proceedings into business rescue proceedings if the proposed
business rescue constitutes a better option than the liquidation of
such an entity.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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